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The Financial Cost of Eating Out

Most people seem to intuitively understand that dining out is more expensive than eating at home.


But how much more expensive is it?

Lobster roll at McLoons Lobster Shack, South Thomaston, ME

Data from Wellio suggests that the cost per meal, per person, of a meal prepared at home is about $4.31. That seems a bit high to me, but let's go with it.


The same data indicate that the same meal, per person, costs about $20.37 at a restaurant, nearly fives times more expensive than eating at home!


Meal kits delivered to your home, while less costly than restaurants, average $12.53 per meal, per person, nearly triple the cost of traditionally prepared food at home.


And it's not just that eating out is expensive; most Americans do it quite often. In 2018, 56% reported eating out 2-3 times per week, 10% ate out 4-6 times per week, and 6% ate out every day. Given the high cost of eating out and how frequently Americans do so, it's no surprise that in 2021, 37% of consumers' food expenses were from eating out, and these comprised 4.5% of their total expenses. To put this in perspective, Americans' saving rate was only 3.1% in September of 2022.


When asked why they ate out, 47% cited socialization, 41% cited special occasions, and 40% cited convenience.


I'm all for spending time with family and friends, but that certainly doesn't have to happen at a restaurant. Given Americans' obsession with big homes, most have more than ample space to entertain at home. Dining out can certainly be a fun way to celebrate a special occasion, but unless you're celebrating your un-birthday or National Just Because Day, there aren't that many special occasions. That leaves us with convenience, something Jim Farrell says is now a "core American value."


In American culture, there's no doubt that convenience is of significant value to many. Some claim that their time is so valuable that dining out is actually cheaper overall just because of the time it saves. For instance, Opher Ganel claims that, for a household with two people, if your time is worth more than about $25 per hour, you're financially better off eating out. But his analysis is fatally flawed because he accounts for the time spent cooking at home but completely ignores the time spent going out to eat.


That begs the question as to whether eating out really saves time at all.


Based on the information I've seen and my own experience, I'd say that it usually doesn't.


At a typical table-service restaurant, it's estimated that it takes two people about 55 minutes to eat out and 75 minutes for four people. A good meal can certainly be prepared and eaten at home in that amount of time and easily less.


Obviously, fast food experiences can be shorter, especially since the typical time spent at a drive-thru is only about 5 minutes, but the quality of the food is notoriously mediocre at best, let alone that it's certainly not inexpensive.


And let's not ignore the time spent driving to and from the restaurant. In most areas, this can easily involve a 30 minute roundtrip or more. Don't forget the cost of the fuel used either.


Food delivery has exploded in recent years, more than tripling from 2017 to 2021. And while it offers unmatched speed and convenience, it comes at a hefty cost. Including fees, taxes, and tip, the premium of food delivery over eating at the restaurant across the three largest platforms (i.e., DoorDash, Uber Eats, Grubhub) is a whopping 82%!! That means that a meal that would cost $20 at a restaurant costs about $36.40 when delivered! That's a huge price to pay for lukewarm food.


All this is beside the point that eating out is generally bad for your health, which is very likely to ultimately be bad for your wallet too.


Sadly, it seems that many have forgotten or ignored that there are myriad ways to prepare food for consumption at home or work that are fairly easy, very cost effective, healthier, often time-saving, and yield tasty food.


There are countless recipes that can be prepared in 15 minutes or less, and slow cookers can be used to start food cooking in the morning that can be eaten in the evening. My wife loves to cook a pot roast all day in a cast iron Dutch oven, and it's mouthwateringly good and difficult to buy from a restaurant at any price. And the preparation time is maybe five minutes.


Many homecooked foods can be prepared at home and refrigerated or frozen to be eaten later. We do this all the time with soups, which are invariably better tasting after they've been frozen and reheated because this provides more time for the flavors to, as the French say, 'marry'. Many prepare their lunches on the weekends and then pull them from the refrigerator as needed.


And you don't always have to do the cooking to avoid eating out. While not up to par with homecooked food, frozen meals are usually much less costly than dining out and can at least rival the quality of fast food, though some are quite good.


If spending time shopping at a grocery store is too burdensome, many now allow you to pick up your items, and many are now offering delivery, even Walmart. The excuse of 'it takes too much time to shop' no longer holds water.


But all these options require something that many simply don't want to invest in: effort and forethought. Both are needed to anticipate what you'd like to eat, when you'd like to eat it, how you'll prepare it, and purchasing it or the needed ingredients.


And that, I strongly suspect, is the real reason why eating out is done so often: it doesn't require effort or forethought. We don't have to plan in advance. We don't have to get our hands dirty. We can get what we want with a tap or a click. And then we claim that we did it for socialization, 'special occasions', and convenience.


Don't get me wrong. I enjoy eating out as much as anyone else. The extreme grilled cheese sandwich restaurant not far from us offers downright amazing food that would be difficult for us to replicate at home. My wife and I love really good sushi. Eating new and different foods is part of why we love to travel. The lobster roll in the picture above was incredible. But then we learned how they were made, which was actually quite simple, and bought three live lobsters for a total of $21, cooked them in our RV, and made four lobster rolls for less than we paid for one at McLoons, and they were every bit as good.


Since COVID19 entered the picture, we've noticed that many restaurants have become significantly more expensive, and the quality of the service they provide has gone down markedly as well. This unfavorable shift in the value equation has resulted in our family probably halving the frequency that we eat out.


Like many things, eating out is fine when done in moderation. But make no mistake, eating out is not good for your finances. Don't let it get out of hand. If we're going to steward our finances and our bodies well, it's hard to reconcile that with a habit of eating out all the time. And if we rein in our eating out, it will be a more enjoyable experience when we do decide to indulge.


"All things are permitted for me, but not all things are of benefit. All things are permitted for me, but I will not be mastered by anything."

1 Cor. 6:12

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